As the world gears up to tackling climate change, the issue of how developing countries will cope with the ravages of a changing climate is rising to the forefront. The poorest in developing countries are most vulnerable to these changes as they have the least ability to adapt to the increasing frequency of floods, droughts and other natural disasters.

Climate change is forcing developing countries to face massive additional infrastructure costs, increasing diseases and dramatic reductions in agricultural productivity. Access to necessary financing will be critical to implement measures that will make their populations better adapt to these changes. To better understand adaptation costs the World Bank initiated the Economics of Adaptation to Climate Change (EACC) study. The study focuses on seven case study countries—Bangladesh, Bolivia, Ethiopia, Ghana, Mozambique, Samoa and Vietnam.

Previous studies on adaptation costs provide a wide range of estimates, from $4 billion to $109 billion a year, and have many gaps. Similarly, National Adaptation Programs of Action (prepared by Least Developed Countries under the United Nations Framework Convention on Climate Change, UNFCCC) identify and cost only urgent and immediate adaptation needs.

Although the EACC estimate involves considerable uncertainty, the study gives policymakers – for the first time – a carefully calculated number to work with that uses a unique approach to estimate the costs of adapting to climate change. This involves comparing a future world where there is no climate change and one where climate has affected daily life leading to additional actions which entail the costs of adapting to climate change.

This study estimates the costs for major economic sectors under two alternative future climate scenarios – one wetter and one drier. This is why there is a range in the costs - $75 billion under the drier scenario and $100 billion under a wetter scenario. The costs were calculated across six regions – East Asia and the Pacific, Europe and Central Asia, Latin America and the Caribbean, Middle East and North Africa, South Asia and Sub-Saharan Africa---and eight economic sectors---infrastructure, coastal zones, water supply, agriculture, forestry, fisheries, health, and extreme weather events.

The study mostly estimated costs for ‘hard’ options involving engineering solutions over ‘soft’ options based on policy changes. Given competing needs for public sector investments in social and economic development, the study will help policymakers cost, prioritize, sequence, and integrate specific adaptation strategies within the context of development plans and budgets.

The study places particular emphasis on improving understanding of the impacts, sensitivity and vulnerability of the poor and most vulnerable social groups, of what adaptation would imply for their livelihoods, and what forms of public support are needed to facilitate such changes.

Lessons Learned

• Adaptation to a 2oC warmer world will be costly and is in the same order of magnitude as the foreign aid that developed countries now give developing countries each year.
• The world cannot afford to neglect mitigation. Adaptation minimizes the impact of climate change, but it does not tackle the causes.
• Development is the most powerful form of adaptation. It makes countries less reliant on climate-sensitive sectors such as agriculture and more able to cope by increasing the levels of income, health and education. Development also helps governments improve infrastructure and reduces the number of people killed by natural disasters.
• However, adapting to climate change means that development does not follow usual patterns, but is tweaked to incorporate strategies such as breeding drought-resistant and flood-tolerant crops, climate-proofing infrastructure, reducing overcapacity in the fisheries industry and accounting for uncertainty in future climate projections in development planning.

The global report of the EACC study helps decision-makers and financers better understand the costs and strategies of helping developing nations adapt to climate change. The soon-to-be released case studies will provide more anecdotal experiences and actual strategies that are being implemented in these seven countries.

The technical study is being led by a core team of researchers in the Environment Department of the World Bank in close collaboration with the other units of the World Bank including the Social Development Department, Development Economics Research Group, Agriculture and Rural Development, regional and country offices, and the Global Facility for Disaster Risk Reduction.

Additional information on the study can be found at worldbank.org/eacc

Please send in your comments and questions to eaccinfo@worldbank.org.